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What is a nonprofit org.

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A nonprofit org. is a type of business that is organized under rules that forbid the distribution of surplus revenue (profit) to owners

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501(c)(3)

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Category that most nonprofit orgs. fall into. It is an organization that has been incorporated under the laws of its state and the IRS has granted it 501(c)(3) status

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Private Sector

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Comprised of for-profit businesses

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Public Sector

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AKA the government

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Nonprofit sector

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-Fills the voids that the private and public sectors can't adequately provide -Nonprofit sector is sometimes referred to the nongovernmental, voluntary, civil society, or third sector -Outside of the U.S. nonprofits are commonly referred to as NGO's (Nongovernmental orgs.)

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True or false: the three sectors of the economy do not compete against one another

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False

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True or false: the government will often provide support or coordinate in other ways with nonprofit orgs.

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True

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True or false: for-profit and nonprofit orgs. will often collaborate when it is mutually beneficial for them to do so

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True

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True or false: commercial firms sometimes complain that nonprofits are at an unfair advantage because they are not required to pay taxes

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True

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True or false: nonprofit orgs. often spearhead social change

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True

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True or false: many advances in human rights can be traced to their origins in the nonprofit sector

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True

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True or false: nonprofits are sometimes created as a response to market or institutional failure

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True: the nonprofit sector addresses perceived deficiencies of commercial activities to produce desirable social outcomes

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Why are for-profit businesses formed?

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For the financial benefit of its owners and/or shareholders

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Why are nonprofit businesses formed?

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To fulfill a mission that benefits the "greater-good" of the community, society, or world

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What happens when for-profit businesses cease operation? (go out of business)

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Assets can be liquidated and the proceeds are distributed to the owners (shareholders) and creditors

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What happens when nonprofit businesses cease operation? (go out of business)

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Its remaining assets must be transferred to another nonprofit org.

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Benefits of 501(c)(3) orgs.

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-Exemption from federal, state, and local income taxes -Exemption from local property taxes (in most cases) -Exemption from unemployment insurance premiums -Lower bulk postage rates -Exemption from the Robinson-Patman Act -Lower charges for some federal services -Charitable, educational, scientific, and certain other orgs. can receive donations, gifts, and bequests (property given at will) that permit tax deductions for the giver -Access to donated advertising space and air time from media companies -Exemption from paying sales taxes (in some states)

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Six essential common characteristics of nonprofit orgs. worldwide

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-Have an institutional structure, which provides some degree of permanence -Are private (separate from the state) -Are prohibited from returning or distributing surpluses to their managers or owners -Are self-governing entities fundamentally in control of their own operations -Are voluntary, meaning that membership cannot be required by law ; and they attract some amount of voluntary contribution, whether financial, in-kind goods, and/or services of labor -Have an identifiable benefit that contributes to the greater good, you cannot start a nonprofit to benefit a particular individual

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True or false: 501(c)(3) orgs. are exempt from paying employment taxes

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False: they pay employment taxes like for-profit businesses do

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Service function

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An organization that delivers a service (ex: neighborhood orgs. that deliver meals to the elderly)

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Expressive function

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An organization that promotes the values or beliefs of its members (ex: advocacy groups for human rights)

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True or false: Nonprofits cannot perform BOTH a service function and an expressive function

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False: they might perform and service and advocate for a cause

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Member-serving nonprofit org.

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Exists to benefit its members, not the public at large (ex: labor unions)

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Public-serving nonprofit org.

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Performs a function that is meant to benefit the public at large, or at least a segment of the public (ex: environmental advocacy groups)

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There are 4 criteria that must be met to qualify for 501(c)(3) status

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-It must accept a non-distribution of surplus revenue constraint -It must concern itself with either educational, religious, charitable, scientific, literary, sports, public safety, or child protection pursuits -It must not participate in promotional activities on behalf of any political candidate -It is limited to spending no more than 20% of annual expenditures on lobbying activities

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True or false: in the U.S. nonprofit sector, 70% of all orgs. fall into either 501(c)(3) or 501(c)(4) categories

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True

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True or false: there are almost 1.5 million nonprofit orgs. registered with the IRS

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True

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Nonprofit orgs. can be divided into three broad categories:

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-501(c)(3) public charities (the largest single category of nonprofit orgs.) -501(c)(3) private foundations -Other nonprofit organizations

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Six steps to starting a nonprofit organization:

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-Conduct a needs assessment -Develop a business plan -Ensure that your organization qualifies as a 501(c)(3) nonprofit organization (only nonprofits granted this status are exempt from paying taxes) -Ensure that all legal requirements for starting a 501(c)(3) nonprofit org. are met -Develop a budget and preliminary fundraising plan -Develop an effective system for record keeping and the tracking of performance

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How is the nonprofit sector funded?

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-It is estimated that the total funding for U.S. nonprofits is slightly less than $1 trillion per year -This number includes revenue from three basic categories: earned income, government, and philanthropy

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What is strategic planning

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A business process that identifies where an organization is going over a given period of time and maps out a plan on how to get there

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Steps of strategic planning

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-Conducting a situational analysis -Establishing the mission, vision, and values of the organization -Establishing objectives to accomplish over a specified period of time

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Aspects of the organization that strategic planning influences:

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-The programs and services that the nonprofit offers -The structure of the organization and the types of roles each person has -Identification of the resources that will be needed to achieve the objectives of the org. (includes both financial and human resources)

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True or false: the planning process is eventually completed

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False: it is a continuous cycle that is part of the orgs. management

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True or false: the planning process is at least as important as the planning document that results from it

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True

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Goals should be SMART

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-Specific -Measurable -Acceptable (members of the org. should embrace the goals) -Realistic (the goals should be achievable) -Time specific

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What is an organization's mission statement?

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A statement that is clear, concise and to the point

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What is an organization's vision statement?

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A statement that is much broader than the mission statement (ex: vision for your life)

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Basic steps in the strategic planning process:

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-State the mission (the overall purpose) of the org. -Assess the organization's internal and external environments -Establish objectives -Develop strategies to achieve the stated objectives -Assign responsibility -Develop a timeline -Establish a budget -Submit the plan to the organization's Board of Trustees for approval -Write and disseminate the planning planning document to appropriate parties -Implement the plan and monitor performance

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The mission statement should include:

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-The org's. purpose -How the mission will be achieved in a broad sense -Who will benefit from the org's. efforts -The mission statement may also express the organization's values and vision

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Key aspect of an organization's internal marketing environment:

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-Its organizational climate. This may be thought of as an org's personality and often helps form the basis for its strengths and/or weaknesses

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Entities that comprise an org's. internal environment:

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-Board of Directors -Management -Staff members -Volunteers

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An organization's external environment broadly consists of:

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-The org's publics (the public environment) -The competitive environment -The macro-environment -The demographic environment -The economic environment -The social-cultural environment -The technological environment -The political-legal environment

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Core marketing strategy components:

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-Identify one of more target markets -Determine your competitive position and develop a positioning strategy -Develop your marketing strategy (product strategy, distribution or "place strategy", promotion strategy, and pricing strategy) -Implementation -Monitor and control

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True or false: the ultimate goal of virtually all nonprofit marketing strategies and tactics is to influence behavior

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True

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What are three behavioral drivers?: (key conditions that are necessary for a behavior to occur)

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-Motivation -Opportunity -Ability

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"BCOS" model (Benefit/Cost/Others/Self-efficacy)

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-Benefits and costs: people recognize that they may need to give something up (costs) in order to get something in return (benefits) -Others: beyond benefits/costs, behavior is often influenced by important others (ex: family members, friends, etc.) -Self-efficacy: this relates to the degree of self-confidence one possesses in their ability to accomplish a goal

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True or false: high involvement decisions tend to be more complex

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True

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Decisions about possible actions vary along two important dimensions:

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-Involvement -Complexity

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What are highly complex decisions?

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Typically one in which members of the target audience are considering undertaking a behavior for the first time

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What are the 4 stages of highly complex decisions?

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-Pre-contemplation: members of the target audience may not even be aware that there is a decision to be made...marketers try to create awareness and knowledge and/or to stimulate interest in the issue ("need arousal") -Contemplation: the target market weighs the benefits and costs of acting (early and late contemplation) -Preparation and action: the target audience has thought through the decision and are ready to act but have not yet taken the first step (marketers might focus on finding ways to boost their self confidence or add incentives to induce action) -Maintenance: some nonprofits do not need to reengage the target audience but others need to assure repeated action

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Low-involvement decisions

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Tend to be less complex, they are perceived to have a low degree of personal or social consequences and/or have been been made several times before

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What is relationship fundraising?

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When nonprofits create a sense of belonging and make a donor feel like they are apart of a distinctive group to influence them to continue to donate in the future

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Market targeting

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Making decisions about which segment(s) of the overall market the organization will target for a response

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Positioning

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The efforts of the organization to shape an image or identity that will appeal to the target market

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Branding

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The perceptual cues that help communicate the organization's market position. Includes the name, logo, slogan, etc.

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Segmentation variables

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-Demographics -Lifestyle/psychographic variables -Personal characteristics -Situation/behavior-specific related criteria -Benefit segmentation -Sacrifice segmentation

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Undifferentiated marketing

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The organization targets a mass audience with a single strategy

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Differentiated marketing

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The organization decides to target two or more market segments and develops a specific appeal and set of programs for each

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Concentrated marketing

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Uses a niche approach. Here the org. focuses its efforts on a single, well-defined market segment (in the case of clients and/or donors)

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Mass customization

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Where the nonprofit, often with the use of technology, tailors its services or appeals to specific individuals

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